Thin Trading Keeps Yield on FGN Bonds at 18.75%
Ahead of inflation data for the month of May, the benchmark yield on Federal Government of Nigeria (FGN) bonds remained unchanged in the secondary market due to thin, pocket trading activities. on naira assets.
Trading activities on local bonds have been relatively quiet over time despite changing market dynamics. Inflation is moving, exchange rate is changing while debt office tight fisted on borrowing rate failed to deter demand – majorly from pension funds administrator.
Inflation rate is projected to rise further, from 33.68% in April, according to data from the statistics office. Despite this, investors have been earning negative interest yield. Analysts are expecting real return to widen, with the hope to see yield repricing in the second half of the year.
The Debt office has raised significant amount from its primary market auction sales at a relatively subdued interest rate on bonds versus treasury bills. This caused an inverted yield in the fixed income market as pension asset continue to mix their portfolios holdings.
Weighing the fast changing market variable, activity in the Federal Government of Nigeria (FGN) Bonds market was subdued, with investors exiting positions in the MAR-25 and JAN-26 instruments.
Analysts said this move caused yields to decrease by 4 basis points and 2 basis points, respectively. Despite these movements, the average secondary market yield held steady at 18.75% compared to the previous close. #Thin Trading Keeps Yield on FGN Bonds at 18.75%
